melbourn msnbc contributor, katrina vanden hoover and former rnc starm the notorious michael steele. the launch pad for peace may be in cairo. in the last 24 hours egypt has been mediating high-stakes discussions between israeli and hamas leaders. speaking today egyptian prime minister hish m kandil said -- in gaza, palestinian medical officials report 95 people have been killed in gaza including 23 children. for the second straight day, israel bombed a building housing local and international media. the target of the attack was a commanding member of an islamic jihad group who also had an apartment in the building. meanwhile, hamas continues to send rockets deep into israel. last night, israel's iron dome intercepted two rockets headed for tel aviv. yesterday, israeli prime minister benjamin netanyahu had

tough talks on twitter writing we are exacting a heavy price from hamas and the terrorist organizations. the idf is prepared for a significant expansion of its operation. in a press gaggle on route to cambodia this morning, deputy national security adviser ben rhodes says the white house's goal is to have nations with influence in the region speak for deescalation. speaking on sunday, the president urged israel to avoid a ground invasion. >> israel has every right to expect it does not have missiles fired into its territory. if that can be accomplished, without a ramping up of military activity in gaza, that's preferable. >> joining us from gaza nbc news foreign correspondent amman mohyeldin. sorry. amman, before we get into the analysis here, give us an update as far as where things stand in terms of egypt's mediating what could be peace talks in this

situation? >> sure. yeah. all eyes have shifted away from gaza about a couple hundred miles south of here and it's all about cairo right now because that's where egyptian intelligence officials and egypt's president is negotiating a truce between israel and the palestinian factions. in the last several hours, egypt's president mohamed morsi has met with both the head of hamas's political office and head of islamic jihad, the two biggest factions in gaza. both of them are saying that they're willing to enter truce with israel on certain conditions. these conditions are that gaza lifts a punishing blockade and siege that has been imposed on gaza since 2006 and allows the free moment movement of people in and out of the territory and supplies and medicine. they want assurances from israel that israel does not carry out any more assassinations on top palestinian leaders like the one we saw last wednesday that triggered all of this. at the same time, they want guarantees from the

international community that israel will abide by these commitments. for its part israel says that the only condition it would accept is a complete cessation of rocket fire into southern israel and wants egypt to guarantee no more weapons will be smuggled into the gaza strip. both sides say they want to avert a war but really right now, they have demands and egyptian officials are hinting they have narrowed the gap between the two sides, but it really comes down to the guarantees in whether or not the international community and egypt can meet some of those demands. a lot of players including the turn i prime minister, ban ki-moon, as well as some of the other regional plays. all eyes are in cairo whether or not this is going to succeed. >> let's talk about hamas' demands because "the new york times" has an analysis that says hamas is negotiating from a stronger position given the fact that the muslim brotherhood is in control in egypt and is more sympathetic to hamas. "the new york times" writes --

and then outlined the things you enumerated a few seconds ago. amman, in terms of the sense that the winds have changed somewhat to favor the hamas demands how factual is that? >> well, it has changed tremendously. when you talk about the arab spring having an impact here it absolutely has. and you really just have to look at the realities on the grounded. as you mentioned the mussst muslim brother hood is the dominant force in egypt. they will not sit idly by and watch not only the political leaders of hamas and others but they've made clear time and time again they will not watch palestinian people. understand in the context of the broader arab world the israeli palestini palestinian conflict cuts deep. you had the same publicly sentiment on the street but you had pro-western arab dictators in power so, for example, in egypt you had mubarak, very much

aligned with u.s. and israeli interests. he was willing to turn a blind eye to israeli aggressions as they described it in gaza so long as he could secure the support of the u.s. and israel. you is a very different dynamic now and why this is also a very big test to egypt, to its credit, america is allowing egypt to immediate this and so far, egyptian officials say they are not [ inaudible ] a peace treaty with israel. president morsi says he's committed to the international obligations but he's also using his leverage to perhaps rein in hamas. it's not necessarily that hamas feels empowered but now perhaps egypt's president is saying to hamas you also have a responsibility to govern, you can't just fire these rockets indiscriminately and trigger this type of backlash. this isn't only a crossroads for israel and gaza, it has a tremendous amount of implications for egypt and u.s. foreign policy vis-a-vis the new emerging realities of the arab world. >> i want to open this up to our

panel in new york. something that has been going on that i don't think has got an ton of coverage, is how the israeli defense ministry is using twitter to sort of talk about what they are doing. max fisher writing in "the washington post" -- skeptics particularly in the arab countries surrounding israel have seemed to consider the tweets posts overly triumphant or insensitive. the less pressure he feels from anti-israeli activists a s musl brother hood factions the better israel is likely to be served. we have tweets focusing on those who have been assassinated, quote/unquote eliminated. here's one that says since the start of operation pillar of defense the idf has targeted 1,350 terror sites through the gaza strip. we talk about the new age of war and the idea that not only are you having a live tweeting -- live twitter stream of what you're doing but what kind of message that sends in terms of

your engagement and whether it's, perhaps, to as "the washington post" says, to triumphant? >> alex, i can't think of the new age of war when you're witnessing an age-old struggle here. for the sake of the children on both sides stop this abomination. it's worth you mentioned the israeli defense forces. it's worth remembering in terls of the timeline, there were negotiations under way for a long-term cease-fire when the israelis air force at the behess of benjamin netanyahu who wants to re-set israeli politics after his involvement with the u.s. elections, and shore up his base, when he decided to attack the militant hamas leader and assassinate him. clearly if there's going to be any security in this region, and don't trust me, trust the six former leaders in an israeli documentary called the gate keepers who spoke of the need for political solutions to this age old crisis. the israelis can tweet all they like but until there is an

unconditional cease-fire and the beginnings of real negotiations through political solutions not military solutions, i fear that the israeli people and the palestinian people will see no peace nor will this new reality in the middle east have as much possibility to emerge in a more democratic way. >> amman, you seem to be fairly bullish on the leadership or i don't know, i'm putting words in your mouth and correct me if i am, but morsi is a good shepard for at least this initial part of some sort of negotiations. i want to call your attention to what the analysis is in some corners about the president here in the united states and his leadership on the issue and his presence in the region. in his own party, there are rumblings he should intervene more directly to help the fodder in syria, speaking of president obama, placing patriot missiles around the region to take down president bashar al asad's air power as soon as the current missile barrages can be contained. through mr. obama's critics the

root of the absence of american leverage in the middle east today is a light footprint that was simply too light. is that shared? you're on the ground. is there a sense that the americans have been not present enough in all of this? >> absolutely. and it's not only that they have been absent, also when they have been present, they haven't been present substantially in the way people in the region would like them to be. president obama came to cairo after he was elected, delivered a positive speech, very much welcomed in this part of the world to re-set relations between the u.s. and the muslim world and the arab world. one of the things that he said that the united states does not accept a legitimacy of israeli settlements in the west bank. here we are four years later settlements have expanded. in the eyes of the arab world this cuts deliver. at the same time, they get frustrated what they see is a biased attitude from the u.s. towards israel when it's

supposeden to a so-called neutral broker. this has undermined a lot of the u.s. credibility in the region. festers a reservoir of anti-americanism that is becoming more and more loud if you will in this part of the world. i think that challenges u.s. policy in other regions in this part of the world when it comes to u.s. interests. >> let me just bring this back to new york for a second. ari, president obama, a lot is made of his speech in cairo at the beginning of his tenure as first term. that was a different middle east in many ways. i mean hosni mubarak was still there, every assumption he would remain there. to the degree that the sands are shifting under his feet he's trying to focus american policy at a time when the middle east is as sort of -- the situation is as contentious as it ever has been, how much blame can we put on the president's shoulder for not being able to foresee this and develop an adequate foreign policy? >> this is a predicament of

every u.s. president, the world has very high expectations for us. often they want us to get out of their lives, to stop using drones to kill their civilians. essentially go away. but when you are the sole super power going away itself has repercussions. we're seeing that here with a vacuum, with the muslim brother hood and morsi, playing a peace broker role without any peace that people feel the u.s. should be a bigger leader on. i think there is a marker here from the cairo speech and fair to criticize this president for a lack of, yes, to use the word, engagement on a lot of the issues that divide israelis and the palestinians. another problem here i would add is something we talked about on the show before, when you look at those numbers, 95 deaths in the recent spell and 23 children as you mentioned, you have to have a wider discussion about what is going on with military targeting and what's going on with civilian deaths. and we as a nation and israel as a nation, are right to criticize

the terrorists and opponents who target civilians. we say we don't target civilians but there are these programs that have that what the military calls collateral damage. that's the other piece to this. i would echo yes, the blockade and the assassination policies are clearly up for debate but there has to be the wider discussion about how to reduce the civilian casualties and bring the parties back to the negotiating table. >> amman, before we let you go, you said at the end when i asked you about the president and sort of impression that folks have in the middle east regarding america and american strength and our ability to immediate conflict such as these, your sense is that that decreasing amount of conviction in america's strength spills over into other countries. can you tell us a little bit about that before we let you go? >> well, certainly. you know when you want to talk about u.s. protests or protests that happen outside u.s. embassies anywhere in the arab world including those that happened in benghazi and elsewhere, it's easy for the extremists in this part of the

world -- and not necessarily just the extremists, but those critical of the united states -- to tap into that anti-american reservoir for other ideological purposes. it was one of the things that al qaeda used do all the time was exploit u.s. deficiency in policy when it comes to israel. palestine and other parts of the world. the u.s. backs governments in saudi arabia and other parts of the gulf and that draws critici criticismps. there are implications for the united states it how it deals with the conflict. you can push it off on the back burner but it remains the central issue that defines u.s. foreign policy in the middle east. that's not forgotten on the 300 million people on the arab world. it shouldn't be forgotten on u.s. officials. >> thank you as always for your time and intel. stay safe over there. we will be following this story as it develops. after the break, making history. the president extends the hand of friendship halfway around the world and makes history as the first sitting u.s. president to visit burma while president obama continues a tour of

southeast asia the white house cannot ignore the northeast. nicolas kristof joins us next on "now." [ fishing rod casting line, marching band playing ] [ male announcer ] the rhythm of life. [ whistle blowing ] where do you hear that beat? campbell's healthy request soup lets you hear it... in your heart. [ basketball bouncing ] heart healthy. great taste. mmm... [ male announcer ] sounds good. it's amazing what soup can do.

i've come to keep my promise and extend the hand of friendship. america now has an ambassador in rangoon, sanctions have been eased, and we will help rebuild an economy that can offer opportunity for its people and serve as an engine of growth for the world.

but, this remarkable journey has just begun. and has much further to go. the flickers of progress that we have seen must not be extinguished, they must be strengthened, they must become a shining north star for all this nation's people. >> that was president obama earlier today during his landmark trip to burma. the country also known as myanmar had been all but abandoned by the international community due to its record abuse of human abuses. the president gave a speech at the city's university and visited with aung san suu kyi, the nobel peace prize laureate that serves in parliament after 15 years of house arrest. the president's four-day trip to thailand, burma and cambodia, his first overseas visit since the election was intended to underscore the foreign policy shift to asia. events in the middle east are making a pivot more difficult. joining me "new york times"

columnist nick kristof. you and i have been talking about burma for years, actually. we've been there multiple times as have i. before we get to the bad stuff, to see the president speaking at rangoon university, meeting with aung san suu kyi, thein sein, cars allowed to pull up to her house on university avenue is one for the history books. >> it's amazing, be alex. also just the changes happening in burma itself. this is a company that was frozen in embers, seen absolutely unchangeable and now it's changing more in a week than it used to in a year. i think -- i mean human rights groups have been critical for the president for going. i think it was right that he go and confirm and kind of place a stamp of approval on that new trajectory. >> and to bring that up, let's get to the bad stuff which is to say that the criticism he has received has been from human rights folks who have said look, change is happening but it's not -- it's too soon for him to visit and among the things they

cite the roy hin ga minority that have been persecuted outraoutra outragely for years now, there's ethnic strife still going on and now that burma is open for development it's unclear with that can be sustainable and on a trajectory that best serves the country. >> all those criticisms are valid. still a couple hundred political prisoners and what's happening to the roy hin ya is appalling. aung san suu kyi has not been as outspoken as she should be. she needs to speak out about the persecution of the ethnic mus m muslims in burma as well. i think it is important for the president to go and make that point to her, to the burmese government, and, you know, there's also a debate within the burmese leadership about whether this is the right thing to do, about whether this opening is right, whether burma is going to get more from the u.s. versus from china. i think it is useful for us to

go and to reward those who have been engineering this really quite extraordinary reform. >> i want to bring in our panel here and some of our friends who have been silent thus far. michael steele. during the election there was a lot of talk about tough positions on china and everyone was sort of trying to out -- sort of out tough talk one another, to say mitt romney had as stance he was going to, you know, talk to tough to china on day one. he was not elected. president obama's trip to burma and the southeast asia is seen as a way to say, china, we're in your backyard and not going to let you have a monopoly over this part of the world. something the president has looked to do for several years now. the issue is whether, a, he can do that, whether he can really actually intimidate the chinese, and b, whether this is the time to be doing it given what's happened in the middle east. i will point out what professor gin canwrong said. the pivot, speaking of obama's pivot to the middle east is a stupid choice.

the united states has achieved nothing and only annoyed china. china can't be contained. i wish the professor would tell us what he or she really thinks. in terms of the pivot happening now, your assessment? >> i think the pivot is part of a refocus that the administration needs to make. look, you know, despite the way mitt romney talked about, you know, standing up to china, it needs to know where the united states plans to go and how it will look at actions taken by the chinese, especially economic. geopolitical, their influence on the u.n. and elsewhere and sort of stopping or advancing certain causes is important. i think the president is sending out a clear signal his second term, while he's done this year domestically at home said okay republicans you want to play, time to play, i think he's saying beginning to say internationally, okay, i'm ready to move on to the international stage and stay and do things heretofor have not done. and to allies, supporters,

friends we're with you. but opponents and those kind of neutral like china where we don't have, you know, a real -- >> we have a difficult -- we have a complicated and difficult relationship. >> that we want to uncomplicate it a little bit and you need to know where we stand. >> nick, you are an expert in many things but also the china question on a number of levels is a complicated one. what do you think this trip does for the chinese, apart from the blustery quote i just read? is this an effective way of dealing with them in terms of asserting american power in a different part of the world? >> there is a competition for southeast asia, burma, cambodia. one presidential trip isn't going to transform that competition, but it's going to show that look, we're in the game and i think it is a reminder to beijing under new leadership as you knnoknow, a n leader takes over and a way of underscoring we're going to be in the neighborhood. we're not retreating. i do think that the pivot has

been done in a ham handed way and the administration to its credit has changed the vocabulary on that. they no longer use the word pivot and they talk about rebalancing and refocusing. this trip was the right thing to do and at the right time. >> it's worth noting, michael eric dyson, the president has many connections to southeast i asia, given the fact he grew up in indonesia. "the new york times" had a great story talking about how president obama's paternal grandfather was serving the british army in rangoon in the 1940ss and i don't think we can underestimate the symbolism and import, both someone who is -- i'm half burmese, my mother is a burmese exile, the vision of president obama going over there, but also in terms of his own personal history, the notion his grandfather left there and service to the british army and his grandson would arrive there on the blue and white wings of air force one. >> it underscores the

international pedigree of his identity and the way in which the spokes that kind of flair out from the hub of who obama is is quite more remarkable than we give him credit for from the rags to riches story and if only in america can this happen. i think first of all you're being modest because part of the speech you didn't play obama said, the fierce urgency of now. but beyond that -- >> because of me. >> he's there because of you. the reality is that, you know, as ari said earlier, what's interesting, america's footprint lightly acknowledged and traced in some parts of the world, is more heavy than others. people want the drones out but they also call upon america to exercise that bully pulpit and what's interesting here about china, if china owns a lot of your paper, talk about the money and doe dough, if you own the paper and economic interest the geopolitics track the cash. and i think that in one sense, obama both proves international pedigree but his savvy american

presidential authority to try to say we have to get ahold of this bull by the horns so to speak. i think all that stuff is coming together, the geopolitical, the substantive, symbolic and the kind of economic interests that is invested there and what remains to be seen to what degree will he be able to balance concerns about human rights and the economic interests that america has. >> you know -- i mean -- think of a president who has had this view of the british empire through his grandfather. this president, i hope in the second term, will rebalance and re-set and refocus with an awareness this country should not become the wounded empire in the way that the british were because i think what you can do in a great way is lead. america could lead a coordinated global recovery, bringing in china, bringing in the countries, brazil, russia, india, bringing in europe, and do real nation building through economic means so you don't end up having a cold war with china or russia or entering a new gray

war with al qaeda or intervention in syria or war with iran. let us hope those are not the foreign policy markers of a second term. he has a chance here. not for cold war with china, but to rebuild because china's going through terrible social instability, economic growth is plummeting. a whole series of issues to unit. >> it's worth mentioning the president announced the return of the u.s. to the tune of 170 million for projects over the next two years and that is something i'm sure the burmese welcome with open arms, but at the end of the day i think he probably could have gone with empty hands and still receive the reception he had which was people flooding the streets. reports of six and seven people deep on the sidewalks as his motorcade passed by. >> that's right. china has been offering a lot of cash, doing a lot of projects there. a lot of chinese business people in burma. china very much wants access to the indian ocean. they want a military presence there to spy on india. but -- so i think it was

encouraging that burma for right now is choosing washington. >> the "new york times" nick kristof a pleasure to speak with you, of all the journalists in the world, on this day in particular. thanks for your time. >> thanks, alex. coming up, will your next grand slam breakfast cost more because of the affordable care act? some business owners are claiming obama care will mean higher prices for customer. pancake prices or political fear mongering. i cannot read the teleprompter for us. ezra klein will break it down for us. that is ahead. i have a cold, and i took nyquil,

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the expiration of the pesky bush tax cuts. >> i think it's pretty clear both in terms of what's being said publicly as you noted and talking to people who have been meeting with the president behind the scenes as i have, that the president wants to fight about taxes now and he wants to force this issue about taxes for wealthier people now. he wants to get that done before the end of the year. >> will the gop wrap them up with a bow? we will discuss next on "now." oh, let me guess --ou see this? more washington gridlock. no, it's worse -- look, our taxes are about to go up. not the taxes on our dividends though, right? that's a big part of our retirement. oh, no, it's dividends, too. the rate on our dividends would more than double. but we depend on our dividends to help pay our bills. we worked hard to save. well, the president and congress have got to work together to stop this dividend tax hike. before it's too late.

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we had a very constructive meeting with the president. >> i think it was a very constructive meeting. >> it was a very constructive meeting. >> i can only echo the observations of the other leaders it was a constructive meeting. >> the headline following friday's fiscal cliff meeting screamed progress, but usually a constructive meeting is washington-east for not close to

a deal. perhaps more revealing while in thailand on sunday president obama asked for a monk's positive mojo to deal with the tax drama unfolding inside the beltway. >> i always believe in prayer. if a beau dast monk is -- >> good vibes. the when trol question, can increased revenues which top republicans have agreed to happen without a tax hike? >> could you accept a deal that does not include tax rate increases for the wealthy? we've seen talk about a possible compromise that would leave rates the same but cap deductions for high income earners? >> no. >> the president has created some wiggle room for negotiation but made pretty clear by basic mathematics income tax rates must rise for the wealthiest 2% and getting backup from surprising corners. on fox news wednesday, weekly standard editor bill crystal

spent a second week wearing his occupy wall street hat. >> i believe republicans will yield a bit on top rates. i mean president obama ran twice on this platform and he won the last i looked both presidential elections. i don't think republicans have the leverage or worth using all -- whatever leverage they have to maintain rates of 35% instead of 37% or 38% especially if you can take it up to millionaires. >> they're going to build bill crystal's tea party hearing him talk like this. >> a lot of the tea party guys don't care if a couple millionaires pay a few more in taxes. >> you heard that. the tea party doesn't care if millionaire taxes go up. do you still have your card? >> i do. i'm trying to figure where this brother was when we had the conversation and all the talk by bill and others was obama was wrong for wanting to increase the tax rates for the top 1%. now we've had the flip flop

because we got our behinds kicked in a presidential election again. the reality is, that the base of the party is in one camp and the leadership is in another. and until the leadership is rec consild with the base and informed the base of the direction and the reason for that direction to accommodate the president's demands you're going to have this tension. it's only going to grow and be exacerbated. the tea party have been i think relatively quiet in giving the administration the leadership, the republican leadership, the room to sort of okay go out and do your thing, have your constructive conversations, but then come back into the house and tell us exactly how we're going to go forward. we have bill and others out there sort of getting ahead of the messaging in a sense. it just creates an internal conflict i think. >> i understand that logic. but then why are house republican leaders bringing paul ryan in to sell this to the caucus? paul ryan, whose returned -- i

can't even say it -- hunting pheasant, hunting pheasant -- >> venting some steam against what may be an inevitable reality. election day -- i had good vibes and i think millions of others did, because there were clear priorities when people re-elected the president. they wanted jobs and growth and they wanted tax hikes on the top 2%, the richest in this country, who have had all the income growth in this last year. i think, you know, progressives, citizens of conscience, need to be one, reframe this debate it's about jobs and growth and not get deficit obsessed. inside the beltway there's a well-funded campaign to have deficit reduction be the top thing, but it's jobs and growth. bill crystal had a come to jesus moment -- >> in favor of higher taxes. >> their capital gains and dividends and carried interest, private hedge fund taxes, the main thing is that at a time of great economic insecurity, particularly the elderly, why

should there be cuts in earned benefits like social security, medicare, medicaid. why should the they take it on the back. >> question one, david gregory outlined, the president will have some -- get these bush tax cuts done. there's a very interesting "washington post" editorial cartoon that i will put up on the screen that basically takes into consideration the question of leverage here as we go over the fiscal cliff and negotiations you see, president obama has a nice comfortable bet bed at the bottom of the fiscal cliff that says more leverage for obama. that's fact. he can do whatever he wants to do and, you know, republicans will be left to go with him or not and see -- and be in favor of raising taxes come january 1st. >> well, and the question is, to what degree then does he leverage that authority and use that bully pulpit for the priorities that are outlined here. now is the time for i think the democrats and progressives and liberals to expand that vision. it's not about winning a -- you

know, getting re-elected. it's about governing in a way that pays attention to the most vulnerable. god knows we've had all this discourse about middle class, but nothing about poor people in this country. nothing about those who are most vulnerable. what about people who can't get to the line to ask for some benefit or entitlement. those are the people that we have to be concerned about. and those are the people who need to be taken care of. >> the question is also, the line in the sand, whether these tax cuts are allowed to expire for those making $250,000 or a million. obviously it's a lot easier to sell $1 million for the bipartisan audience. but 250 and above is what actually brings in the revenue that we need theoretically need, ari. >> look, this is a right wing frame. i mean katrina talked about deficit obsession. that's where this comes from. a part is from tax plans that were always going to expire, but another big part are the mandated cuts that came out of the hostage crisis of the debt ceiling. so the way i look at it is this, a far famous cartoon that shows

a protester and has a sign, what do we want? time travel. when do we want it? when do we want it? it doesn't matter. because if you have a time machine it doesn't matter when you get it. congress has a time machine here. okay. this can expire, this can go a month or two months. sooner or late ther can get it done. as far as i'm concerned, let it expire, a product of a tea party crisis that was manufactured by right wingers to focus on the deficit and not jobs. let it expire. let the tax rates go up. and then come back to the table and get us a jobs plan. >> i think that's so right. i think -- and also we keep calling it the fiscal cliff. it's a fiscal curve. i mean, there's a manufactured crisis here that could endanger not enhance our economic security. >> even if you do around a curve too fast you lose control. >> i think the american people are concerned about too fast. >> the markets are. >> the markets are concerned about too fast. progressives may not be concerned about too fast, which is fine for progressives, the rest of us are concerned about deficits because that's a bill

we're passing to future generations and the way that congress approaches this problem does matter. if we want to call it a cliff that's the appropriate reality. >> but look at it this way, it's not like progressives the rest of us in the real woerlds. the people in the real world are being spoken for by progressives because those people are the ones that have to pay the biggest debt here. how are you talking about giving multimillion ariannas cut when talking about people making $24,000 for family of four who can barely reach the poverty level are enduring entitlement cuts. >> put that trillion dollars on the table that's fine, but then tell me what you do about the remaining $3 trillion to the middle class that's still not paid for, that are part of the bush tax cuts. that's the realty. no one wants to talk about that. let's tax the rich. you still have a $3 trillion hole you have to deal with. >> so many other ways of dealing with that hole. >> oh, my gosh. >> so many other ways. >> unfortunately, this segment is called cliff notes because it's way too short and --

>> apply -- it for everybody. >> in closing, michael, whether you want to call it the cliff or curve is open to interpretation, a lot of people, not just progressives who think it's a curve. it's worth noting the president did meet with several ceos, warren buffett, tim cook from apple, jpmorgan chase's jamie dimon to assuage fears, business panic that the fiscal cliff doesn't end in a feather bed. this is a developing situation and we'll follow it. after the break several red state governors are weighing the decision to opt into federal health care exchanges and expand medicaid coverage. why the governors would deny health care to millions of constituents. ezra klein joins us to discuss the realities of obama care next. (splashing)...

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after voting 33 times to repeal the affordable care act house republicans seem to be finally and undoubtedly begrudgingly move on. >> it's clear the president was re-elected, obama care is the law of the land. business owners don't appear to be on the same page. some are trying to fight the law asserting their bottom lines are at risk. the naples daily news reports the ceo of pa pa john's a mitt romney supporter may have to raise pizza prices and slash workers hours. deny's franchisee is planning to do the same though the corporate office says his statements don't speak for the company.

starting in 2014 businesses with more than 20 employees will be find $2,000 if they don't provide health insurance to employees working 30 hours or more a week. "washington post" columnist and msnbc policy analyst our favorite wonk of them all, ezra klein. always great to see you. >> hi, alex. >> how much is luster and how much is reality? >> it's a fair amount of reality. i think sometimes what people want to hear on this thing is it's all free lunch. no problems, all a lie, none of these people have to pay more. as you said they are going to have to pay. if you are a business with more than 50 employees and you don't pay your employees enough that they can buy health insurance without qualifying for federal subsidy, not a high wage employer and don't offer them health care insurance you get the fee of $2,000, but not on your first 30 employees. it gets complicated but the bottom line is they will pay more. what gets missed here is what a

huge wind they got. you know how much employers were going to have to pay under richard nixon's health care law? >> how much? >> 75% of the cost of the insurance. under president clinton's law 80%. $2,000 now, which is about a seventh to eighth of a health care plan. it's going to cost them and employers although they got a much smaller share of that burden than they have in almost any other health care plan ever proposed by an american president, they still have some and for some employers it will be a burden. >> the trade-off is the important take away. the other thing i want to talk about, this defies logic, is the republican governors turning down the medicaid expansion, largely paid for by the federal government. this medicaid expansion will cover 17 million americans, right, and the federal government funds it at 100% from 2014 to 2016, goes down to about 90% by 2020, but ezra, you look at the governors deciding not to

participate in this plan, which is to say, texas, louisiana, mississippi, alabama, georgia, south carolina, and florida, you may recall how they voted in this presidential election, and then coincidentally texas has the highest rate of uninsured people in this country, one in four people in texas doesn't have health insurance coverage, how does a governor explain that to his constituents? >> >> this is crazy town. what you said they're getting at the outset is essentially free health care for these people in their state and one interesting thing, you mentioned, texas has the highest rate of uninsured in the country. red are much more uninsured. so this plan, this medicaid part in particular, is a huge subsidy from blue states to red states. massachusetts and new york, and rhode island are helping to pay for texas and missouri and alabama. but they're going to say no for the first couple years when they get 100% paid for and then no after that when they're getting a 9 to 1. the current medicaid program

which no state has to participate in, i should say, gives you about a 55% match. the federal government pays about 55% of the costs. these states are saying they're going to say no over a long period of time to a 90% match. i don't believe it for a minute. there's going to be a year or two they try to hold out and show the purest republican of them all, but it's not going to last long with when the economics come clear. >> i think rick perry was trying to make crazy town the official state capital of texas as part of that purist thing. thank you to ezra klein for information and deciphering policy the way no one can. thank you to my panel. professor dyson, ari, katrina and chairman steele. i will see you back here tomorrow at noon eastern, 9:00 a.m. pacific when joined by rana fa ru hard, sam stein, msnbc's martin bashir and sam from "the new york times" to teach us how to cook a perfect thanksgiving dinner. tune into "the last word"

tonight at 10:00 eastern, i will be filling in for the irreplaceable lawrence o'donnell. updating our facebook page with all the secrets of my last word prep which involves turkey sandwiches and sleep at facebook.com/now with alex. "amount reports" is coming up next. humans -- even when we cross our t's and dot our i's, we still run into problems. namely, other humans. which is why, at liberty mutual insurance, auto policies come with new car replacement and accident forgiveness if you qualify. see what else comes standard at libertymutual.com. liberty mutual insurance. responsibility. what's your policy? a regular guy with an irregular heartbeat. the usual, bob? not today. [ male announcer ] bob has afib: atrial fibrillation not caused by a heart valve problem, a condition that puts him at greater risk for a stroke.

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